I. CURRENT SITUATION Bregman (B) opened two restaurants in TorontoÃÂ¡ÃÂ¯s Eaton Centre - Mmmuffins (M): December, 1979 & MichelÃÂ¡ÃÂ¯s Baguette (MB): April 1980. By July 1980, both restaurants began to stabilize. B has limited experience/resources. BÃÂ¡ÃÂ¯s objective ÃÂ¡ÃÂº build substantial restaurant chain with one or both concepts.
II. ATTRACTIVENESS OF OPPORTUNITIES Unattractive macro-environment: ÃÂ¡ÃÂ¼ 1980 interest rates (prime loan interest rate = 15.3%) make future less predictable & investment planning hazardous (Hill & Jones 2001:85). If B wants to expand internally, he may need to borrow at ÃÂ¡ÃÂ¼ cost or mortgage part of business. Inflation (1980) also ÃÂ¡ÃÂ¼ @ 10% ergo equipment & inputs (ingredients) costs ÃÂ¡ÃÂ¼.
Industry environment attractiveness: Industry shifted from retail bakeries to supermarkets with in-store baking, fresh products & low prices. B must be aware of shift of customers to shopping centres.
Key success factors for competing in M & MB markets: Superior value creation, low costs, differentiated product, brand loyalty/customer responsiveness, efficiency, high quality, & innovation.
Strategy Ã Â¡C distinctive competencies / competitive advantages: M strategy ÃÂ¡ÃÂº specialization, attractive & efficient store design, ÃÂ¡ÃÂ¼-quality, freshness, simple menu. MB strategy ÃÂ¡ÃÂº ÃÂ¡ÃÂ¼-quality, freshness, eating quickly in some comfort. MB has ÃÂ¡ÃÂ¼-quality standards, superior recipe quality (freshness), careful specialization, organization & store design, excellent service delivery system, expert bakers & specialized French equipment. However, success of MB not difficult to replicate b/c: 1) Probably not new enough to have developed brand loyalty; 2) Probably does not have absolute cost advantages (unless processes are markedly superior); 3) Too small to benefit from economies of scale. MÃÂ¡ÃÂ¯s success is even less difficult to replicate due to simple, standardized menu & ÃÂ¡ÃÂ½ equipment costs @ only 10% cost of MB equipment.
III. DECISIONS B MUST MAKE w/r/t M & MB 1) Suitability for wide use; 2) Assuming one or...